Last checked at 
(Alliance News) - HSBC plans to cut 15% of its global workforce as it embarks on a radical cost-cutting plan, the banking giant's interim chief said Tuesday.
"It's fair to say that our direction of travel will be to move the current headcount of 235,000 to be closer to 200,000 over the next three years," Noel Quinn told Bloomberg News in an interview.
The plans come as HSBC reported Tuesday a double-digit drop in annual profit on a goodwill impairment, despite solid revenue growth, as the group starts to make significant changes to its structure.
For 2019, HSBC's pretax profit fell by 33% to USD13.34 billion from USD19.89 billion the year before, even as revenue rose by 4.3% to USD56.10 billion from USD53.78 billion.
The reported pretax profit fell way short of market expectations. Analyst consensus had HSBC achieving pretax profit of USD20.03 billion for the year.
The group profit performance was hurt by a total goodwill impairment of USD7.35 billion, with USD4.0 billion coming from HSBC's Global Banking & Markets division, and USD2.5 billion from Commercial Banking, reflecting lower long-term economic growth assumptions, and the planned reshaping of GB&M.
HSBC's return on tangible equity stood at 8.4%, down 20 basis points from 8.6% the prior year.
Meanwhile, adjusted jaws for 2019 was at positive 3.1%, swinging from a negative 1.2% in 2018 due to HSBC's improved cost discipline.
The jaws ratio - a key financial performance indicator - is the difference between the percentage growth in income and the percentage growth in expenses.
The CET1 solvency ratio for HSBC in 2018 stood at 14.7%.
HSBC kept its dividend per share for the year unchanged at USD0.51.
Looking ahead, HSBC said the coronavirus outbreak has created significant disruption for its suppliers and customers, and could lead to a reduction in revenue from lower lending and transaction volumes, as well as credit losses.
The banking stock was down 2.2% in Hong Kong.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 0.8% at 7,372.20
----------
Hang Seng: down 1.4% at 27,559.15
Nikkei 225: closed down 1.4% at 23,193.80
DJIA and S&P 500: US markets closed for holiday Monday.
----------
GBP: down at USD1.2994 (USD1.3013)
EUR: flat at USD1.0834 (USD1.0836)
Gold: up at USD1,588.30 per ounce (USD1,582.14)
Oil (Brent): down at USD56.84 a barrel (USD57.34)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Tuesday's Key Economic Events still to come
0930 GMT UK Finance monthly mortgage lending trends statistics
0930 GMT UK labour market statistics
1100 GMT Ireland labour force survey
1100 CET Germany ZEW economic sentiment
----------
China will accept applications for exemptions from trade-war tariffs on imports of US medical equipment from March 2, the government said, as the country battles to contain the new coronavirus epidemic. Products that qualify include patient monitors, blood transfusion equipment and instruments to measure blood pressure, according to a list released by the Customs Tariff Commission of the State Council. The decision came as the World Health Organization warned against a global over-reaction to the new coronavirus epidemic following panic-buying, event cancellations and concerns about cruise ship travel, as China's official death toll neared 1,900. More than 72,000 people have now been infected in China and hundreds more abroad, although the WHO stressed the disease has infected a "tiny" proportion of people outside its epicentre and the mortality rate remains relatively low. The outbreak is threatening to put a dent in the global economy, with China paralysed by vast quarantine measures and major firms such as iPhone maker Apple warning it could damage bottom lines.
----------
EU member states' positions on the bloc's next long-term budget are moving further apart in the run-up to a crunch summit later this week, diplomatic sources present at a Monday meeting of European affairs ministers reported. The prospect of striking a deal this week looks less likely than before European Council President Charles Michel unveiled a new draft budget on Friday, according to the diplomatic sources. Leaders will most likely need to meet again before they can agree, one source added. However, EU Budget Commissioner Johannes Hahn urged member states to overcome their differences and reach a compromise that will allow the bloc to begin its new seven-year spending period on time at the start of 2021.
----------
The EU saw a contraction in demand for new passenger vehicles in January, the European Automobile Manufacturers Association reported. Passenger car registrations declined by 7.5% in January year-on-year, due to major taxation changes that had been announced by some member states for 2020, pulling some registrations into December 2019. The 7.5% decline compared to 22% growth in December, 4.9% in November and 8.7% in October. The EAMA also attributed the lower vehicle registrations to weakening global economic conditions and uncertainty caused by Brexit.
----------
BROKER RATING CHANGES
----------
JPMORGAN RAISES SEVERN TRENT TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 2550 (2000) PENCE
----------
CITIGROUP CUTS COCA-COLA HBC TO 'NEUTRAL' ('BUY')
----------
COMPANIES - FTSE 100
----------
InterContinental Hotels Group raised its dividend after reporting annual results that missed analyst expectations. IHG reported an 7% rise in revenue of USD4.63 billion in 2019 from USD4.33 billion in 2018. Pretax profit came in at USD542 million for 2019, up 12% from USD482 million in 2018. According to company-compiled analyst consensus, IHG was expected to post pretax profit of USD711.16 million for 2019. Operating profit from reportable segments was USD865 million in 2019, up 4% from USD832 million in 2018. The consensus estimate had operating profit from reportable segments coming in at USD859.83 million for 2019. Reportable segments exclude system fund results, hotel cost reimbursements and exceptional items. IHG reported a decline in revenue per available room of 0.3% at group level, including a 0.2% slip in the Americas region and a sharper fall in Greater China of 4.5%. IHG said the performance was hurt by macroeconomic and geopolitical factors, increased supply growth ahead of demand in some markets, and the political protests that took place in Hong Kong. IHG raised its total dividend 10% to 125.8 US cents from 114.4 cents.
----------
Glencore's annual profit was hurt by weak commodity prices and trade uncertainty, the miner said Tuesday, though it did beat market forecasts. Swiss firm Glencore, which also has a significant commodities trading unit, posted adjusted earnings before interest, tax, depreciation and amortisation of USD11.60 billion for 2019, 26% lower than the year before. However, according to company-compiled analyst consensus the market had forecast adjusted Ebitda of USD11.25 billion. Glencore's adjusted earnings before interest and tax fell 55% to USD4.15 billion, while it posted a net loss attributable to equity holders of USD404 million after a profit of USD3.41 billion the year before.
----------
Anglo-Australian mining firm BHP Group increased its interim dividend, as profit and revenue rose on higher prices and favourable currency movements. For the six months to the end of December, pretax profit rose by 15% to USD7.79 billion from USD6.80 billion the year before, as revenue grew by 7.5% to USD22.30 billion from USD20.74 billion. BHP's profit performance was helped by stronger iron ore prices and favourable exchange rate movements, despite overall lower volumes and increased costs. Profit from operations increased by 13% year-on-year to USD8.31 billion from USD7.33 billion. BHP lifted its interim dividend by 18% to 65 US cents per share compared to 55 cents the prior year, even as net debt increased by 21% to USD12.84 billion from USD10.64 billion.
----------
Paper and packing firm Mondi promoted Chief Financial Officer Andrew King to chief executive effective April 1. Mondi said Peter Oswald is to step down as CEO and leave Mondi on March 31, as planned.
----------
Bookmaker Flutter Entertainment confirmed that it has received notification from the Australian Competition & Consumer Commission that its proposed combination with the Stars Group has been granted informal approval. Flutter said the deal remains subject to approval by the Australian Foreign Investment Review Board as well as further international regulatory bodies.
----------
COMPANIES - FTSE 250
----------
Residential landlord Grainger said it has agreed to forward fund and acquire a 348-home, private rental sector development at Queens Road in Nottingham for GBP55.6 million from Blocwork, a joint venture involving Network Rail. Grainger said construction is expected to start in the second half of 2020, with the scheme expected to be leased and stabilised by early 2024. Grainger expects the investment to generate a gross yield on cost of over 7% once stabilised.
----------
COMPANIES - OTHER MAIN MARKET AND AIM
----------
Metro Bank could make a decision on its new boss as early as Tuesday, Sky News reported late on Monday. Sky News said the lender, which has been dogged by financial problems over the past year, is under pressure from the City to make interim Chief Executive Dan Frumkin's role permanent. Citing "an insider", Sky News said Frumkin was "likely" to be handed the role at a board meeting as early as Tuesday, though conceded this is not certain given Metro Bank's "unpredictable" decision-making.
----------
COMPANIES - INTERNATIONAL
----------
Apple said disruption due to coronavirus had hit both production and demand in China, and the company was "experiencing a slower return to normal conditions" than planned. "We do not expect to meet the revenue guidance we provided for the March quarter," it said in a statement, adding that worldwide iPhone supply would be "temporarily constrained" and demand in China had been affected. Apple had forecast revenue of USD63 billion to USD67 billion for the second quarter to March.
----------
Tuesday's Shareholder Meetings
Berkeley Energia
Altus Stratgies (re Mancha investment)
Dewhurst
Titon Holdings
Galantas (re share consolidation)
----------
By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
